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Friday, July 24, 2015

Social Security Disability Solvency: The Backbone of Workers' Compensation

The Social Security Disability Insurance (SSDI) system is estimated to run out of money in 2016 and the consequences, if not patched-up by legislation, are going to critical to the nation's patchwork of workers' compensation programs. Since its inception over 50 years ago, SSDI has been the safety net, especially in reserve offset states. It is the backbone of a program to support injured workers.

Over the decades, for numerous economic, social and political factors, the nation's workers' compensation program has continued to diminish in it's ability to deliver as intended. Both the medical and indemnity components have been difficult to obtain, and have restricted what they do deliver.

The trustees of the SSDI program reported this week that the SSDI program will run out of dollars for beneficiaries in 2016. They reported that, "....without legislative changes, DI [SSDI] reserve depletion will occur in the fourth quarter of 2016. Without legislative changes, DI reserve depletion will occur in the fourth quarter of 2016."
The National Organization of Social Insurance (NASI), a Washington DC based non-profit "think tank" of nation experts reported:

"The Disability Insurance (DI) trust fund, which is legally separate from the Old-Age and Survivors Insurance (OASI) trust fund, requires legislative action soon to ensure that all scheduled benefits for disabled workers and their families can be paid in 2016 and beyond. Of the 6.2 percent of earnings that workers and employers each pay into Social Security, 5.3 percent goes to the OASI trust fund and 0.9 percent goes to the DI trust fund. A 0.2 percentage-point increase in the DI contribution rate (from 0.9 percent to 1.1 percent for workers and employers each) would fully fund the DI program for the next 75 years. Alternatively, a temporary reallocation of part of the OASI contribution rate would strengthen DI while keeping the OASI fund adequately funded for many years into the future."

Both workers' compensation and SSDI are now the focus of state and national legislators for survival. In this hotly contested presidential election cycle, perhaps legislators will attempt to kick the can down the road again, and postpone a longterm legislative fix.

SSDI, like workers' compensation benefits, are critical components of the backbone of the nation's disability system. Legislatures must creatively act to avoid dire synergistic  consequences of insolvency.

Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thompson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson-Reuters). For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  have been representing injured workers and their families who have suffered occupational accidents and illnesses.